Her decision left Andy Burnham, the shadow health secretary, Yvette Cooper, the shadow home secretary, and Liz Kendall, the shadow health minister, definitely on the ballot paper. Jeremy Corbyn, the most left wing candidate, is still only half way to the required 35.

Creagh said Labour lost the general election “because people trust us to run their schools their councils, their hospitals. But they do not trust us to run the economy. Tackling inequality is why the Labour party exists. It’s in our DNA. But the next Labour leader will have to show that Labour understands the problems facing the UK’s 5 million self-employed people, sole traders and small businesses. That understanding must run through our party’s DNA like a golden thread”.

In her attack on Mr Miliband she said business people were virtually ignored by the Labour Party, with some invited to write reports for the party only for them to be left to gather dust on Westminster bookshelves.

She said it was indicative of the party’s relationship with business leaders that during the election campaign not a single chief executive of a large company had backed Labour’s opposition to an EU referendum.

Creagh called on the party to “make the principled and unambiguous case that staying in the EU is in our national interest” and dismissed proposals from some members of the shadow cabinet that Labour boycott a cross-party pro-European campaign.

Writing in the Guardian on Saturday she said her own views on Miliband’s attitude to business were “crystallised” when she was rebuked last October for briefing bus company chief executives on the party’s plans to give regional authorities powers to regulate them, a policy she supported but which she recognised would reduce their profitability.

Creagh wrote: “I had good relationships with the big five bus companies, so we rang round to brief them as a courtesy.”

When she was challenged by Miliband’s team before the launch of the policy, in Manchester town hall, on why she had briefed the bus companies she explained that Labour would need them to deliver the reforms the party wanted to make.

She wrote: “I was told we wanted to ‘pick a fight’ with them, to show Labour was tackling vested interests. I was dismayed. Bus subsidy was a complex area and if we wanted reform without transport chaos, we would have to work with the companies, not against them.

“That exchange in Manchester town hall crystallised for me that the leader’s office did not understand business and didn’t understand what business needed from government.”

She was moved out of the transport portfolio soon after the incident.

Creagh added: “Labour must work in partnership with business – the strong social partnership model used in countries like Germany could be one way of tackling Britain’s productivity gap. Labour must want big business to succeed – it’s where many of the jobs are – but pay and conditions must be fair. And Labour must want small business to succeed: it’s where innovation and creative thinking take place.”

She said she would not back any other candidate, but said her supporters were free to do so. It was thought Creagh had gathered just over 10 nominees, including a number of new MPs such as Stephen Kinnock.